Effective Performance Management System For Enhancing Growth
MS. NEERAJ KUMARI
(Research Scholar, MRIU) (Corresponding Author)* Assistant Professor (Humanities & Management) FET, Manav Rachna International University Faridabad, INDIA
DR. RUCHI MALHOTRA**
HOD Management Faculty of International Programmes, Manav Rachna International University ESSCA Ecole de Management LUNAM Université FRANCE
Abstract: Performance management system (PMS) is the heart of any “people management “ process in the organization. Organizations exist to perform. If people do not perform, organizations don’t survive. If people perform at their peak level, organization can compete and create waves. The paper aims to study the present existing PMS in ICICI prudential and Bhushan Steel Ltd. The sample size was 100. The primary data has been collected through the industry interactions and the secondary data has been taken from the reports and periodicals. Performance appraisal practices in India vary from almost “no appraisal” to a “sophisticated multipurpose, multi-component based appraisal system”. Good example of such system is: Larsen & Toubro limited, state bank of India and its associated bank, ICICI prudential. The paper concludes that the Individual’s performance can be improved if we don’t look at the individual as a problem; instead look at his/ her problem. Performance management supports a company in the achievement of strategic goals and objectives. It assists managers in setting clear performance expectations for all employees that are aligned with the strategic goals. It provides a structure for employees to develop the skills they need to achieve the company’s strategic goals.
Key Words: job description, appraisal, compensation, recognition, career development.
Performance is what is expected to be delivered by an individual or a set of individuals within a time frame. What is expected to be delivered could be stated in terms of results or efforts, tasks and quality, with specification of conditions under which it is to be delivered.
According to author T.V. Rao:
Performance management involves thinking through various facets of performance, identifying critical dimensions of performance, planning, review- ing, and developing and enhancing performance and related competencies.
1.1 Aims of performance management
The overall aim of performance management is to establish a high performance culture in which individuals and teams take responsibility for the continuous improvement of business processes and for their own skills and contributions within a framework provided by effective leadership.
The following are the aims of performance man- agement system:
• Empowering, motivating and rewarding em- ployees to do their best
• Focusing employees’ tasks on the right things and doing them rightly
• Proactively managing and resourcing perfor- mance against agreed accountabilities and objectives
• The alignment of personal/individual objec- tives with team, department/divisional and corporate plans
• The presentation of objectives with clearly defined goals/targets using measures, both soft and numeric
• The monitoring of performance and tasking of continuous action as required
All individuals being clear about what they need to achieve and expected standards, and how that contributes to the overall success of the organization; receiving regular, fair, accurate feedback and coach- ing to stretch and motivate them to achieve their best.
On the basis of the annual appraisal the next step is to take the administrative decisions like promotion, transfer, discipline and pay raise etc.
However there is no one way to manage per- formance. Whatever system is adopted needs to be congruent with the culture and principles that pervade the organization.
2. LITERATURE REVIEW
While in recent years there has been an exponential growth in the column inches devoted to this area, the terrain nevertheless remains impoverished conceptu- ally. As Lloyd and Payne (2004) observe, ‘not only is there no clear definition of the model, but there is also a fundamental lack of agreement about the specific practices it should and should not incorporate, as well as the meanings that are ascribed to those practices’. Accounts of the evolving model use a wide range of terms, thereby heightening the uncertainty surround- ing its underlying tenets. Thus, for example, high performance work systems (Danford et al., 2004); high involvement work systems (Harmon et al., 2003); high commitment management (Baird, 2002) and similar formulations represent not just significant variations in terminology, but attest to large scale conceptual confusion. The significance of this observation extends beyond mere semantics. For example, a focus on high performance work systems suggests a mechanistic route to sales and revenue growth through quality man- agement (QM) techniques such as statistical process control and conformity evaluation. This is the agenda popularized by successive generations of quality gurus’ viz. Crosby, Deming, Feigenbaum, and Duran (Dale, 2003). Under this formulation, the significant roles are those occupied by senior managers and quality professionals. Conversely high commitment management, given formal theoretical expression via the concept of human resource management (HRM), emphasizes the importance of all organizational play- ers. Especially from the perspective of resource based HRM, competitive advantage is derived not from the formal organization and shaping of work per se, but the constituent workforce via both functional flexibility and commitment to organizational business plans and goals (Beardwell, 2001).
Figure (1): The performance management cycle
Schultz (2003) “Performance management is the day-to-day management of employees in terms of the goals of the organisation. A performance management system is a systematic process that formally documents the goals and objectives of each employee, with a built- in review process. Good performance management means that each person will have goals and measures that are linked directly to the organisation’s strategy”.
Bélanger et al. (2002) represents a considerable advance providing some much needed conceptual grounding. The strong caveat expressed here is that the emergent format must be understood ‘as work in progress’, while the production system responds to sig- nificant changes in the political economy of advanced capitalism. Nevertheless, it is argued that the new mod- el can be viewed as a composite of three now relatively well embedded spheres of the production process: (a) production management; (b) work organization and; (c) employee relations. This multi-dimensional con- ceptualization adheres with the widespread emphasis on the necessity for so-called ‘clusters’ or ‘bundles’ of practice (McDuffie, 1995). Danford et al.’s (2004) notion of high performance work systems implies a distinctly mechanistic approach downplaying the role of human agency. Harmon et al.’s (2003) phraseology of high involvement work systems is sensitive to the dimension of work organisation, capturing the need for there to be enhanced opportunities for employees to make decisions, exercise discretion and mobilise tacit knowledge, but again complementary HR issues are eclipsed. Conversely, the term high commitment management (Whitfield and Poole, 1997) is sensitive to the latter sphere, the elision here, however, concerns facets of production management and work organ- isation. For these reasons in this review the phrase high performance management (HPM) is utilised as an all encompassing term, providing a broader and more generic conception of the terrain than the above terminologies; in essence a composite embracing Bé- langer et al.’s three dimensions. So armed with both conceptual clarity, and indeed a powerful analytical tool, we move on to consider the principal theoretical debates surrounding the phenomenon.
3. RESEARCH METHODOLOGY
3.1 Research objective:
To study the present existing PMS in ICICI prudential and Bhushan Steel Ltd.
3.2 Research Methodology:
It is a descriptive study. The sample size was 100. Source of information:
a) Primary- The information has been collected by taking interview of the HR manager and by getting the questionnaire filled up by the employees.
b) Secondary- This information is collected through books, internet and periodicals.
4. FINDINGS AND DISCUSSION
4.1 Performance management system of ICICI Prudential
The ICICI prudential has intranet connecting all the branches together for information exchange as well with the head office. The performance management system of ICICI prudential works online on a system called PACE. All the employees in ICICI prudential are identified by a magical code, which is specific to an employee. This code acts as employee’s identifica- tion. The performance cycle starts with goal setting process on PACE.
The process starts with:
1) Uploading the goal sheet on PACE
A goal sheet uploads gives an interface to the staff member to log on PACE and to write in their goals, targets, measures and weight age on PACE. A mail trigger goes to all staff member from whom the goal sheet gets uploaded on PACE. There are two types of goal sheet:
a) Standard goal sheet: for standard roles CM, SM, ASM, ZM, BRM, TM, BSM, and FSM the KPIs have been predetermined and pre- defined at the organization level and have been already updated in the goal sheet on PACE one need to just input the target.
b) Non standard goal sheet: for the non- stan- dard roles the goal sheet has been discussed and finalized between the manager and the staff member and the ratified by func- tion head. For all such roles staff members need to input their goals, measures with the weight age in their goal sheet on PACE.
2) Updating the goal sheet
- It is the responsibility of the staff member to update the goals, measures and weight age in case of non- standard role and targets in case of standard role. Staff member has to submit the goal sheet to man- ager for approval.
- For this the steps to be followed are:
- The staff member to go to the employee self service and select performance management.
- Then go to the goal sheet and search using the employee code or ID.
- The updated goal sheet is then sent to the man- ager for the review.
- Update the targets in case of standard goal sheet and weight age in case of non-standard goal sheet.
- After updating the sheet goes to the manager for the review.
3) Review of goal sheet by the manager
- It is the responsibility of the manager to review of each of the goals, targets, and measure and weight age before sending it back to the staff member for filling in for self appraisal.
- Incase the goal sheet requires any change or updations have a discussion with your reportee prior to any updations in the goal sheet.
- To approve the goal sheet if one is fully satis- fied with it for the same to be available to the staff members for self-appraisal.
- Manager can also deny if the goal sheet re- quires further updating.
- Incase of change of goal sheet or role change:
a) The staff member request for goal sheet change and a mail is triggered to the man- ager requesting for the approval.
b) Manager reviews the goal sheet and ap- proves if required to be updated or deny if the goal sheet is correct.
c) A mail is triggered to the staff member.
The employee appraises himself by giving details of his achievements against the targets set for the given performance period and then rates his performance on the scale of five. The rating goes to the manager for review.
5) Pre feedback performance discussion and rating
The manager organizes a pre feedback performance discussion (PFPD). Here the staff member gets a fo- rum to dialogue with his manager. This helps the staff member in the following ways:
Staff member gets an opportunity to talk to his manager about his achievements, what he has done, and how he has done it. This helps the staff member to give a realistic and correct view of his performance to his manager.
The manager through this process gets a clear un- derstanding of the staff member’s performance, the level of complexities involved and how the achieve- ments has happened. It helps manager to give an ac- curate rating based on performance.
Manager writes the performance summary and gives the performance rating to staff member.
- The document is transferred to corporate HR person, which then conducts a ratification pro- cess with the zonal manager/regional manager/ function head as the case may be.
- This program focus on the need to differentiate performance and to ensure equitable distribu- tion of ratings, individual performance needs to be assessed relative to performance of the group. This is done to provide the performance management system with the desired flexibil- ity while adhering to the need to differentiate performance in a fair manner.
- This process is an organization wide process by way of which every appraisee’s rating is discussed with a large team. This process helps the ratifying manager to
- Understand the individual’s perfor- mance via the whole group.
- Remove biasness if any
- It is a tiered process, the rating are firstly rati- fied by Zonal Manager and then by the regional heads.
- Functional heads finally ratifies all ratings. HR anchors this process.
- The ratification team can ask for clarifications/ inputs from individual appraisers at any stage of ratification process.
7) Performance review discussion and feedback
The final ratification ratings are then given which may differ from the ratings given by the manager. These ratings are given to the managers who then conduct the performance review discussion (PRD) with the employees and discuss the ratings and give staff member his performance feedback.
So the appraisal process and the performance cycle complete here and the new cycle starts with new target setting.
SELF ASSESSMENT: the performance review starts with employee self assessment. Employee has to describe significant achievements and contribution made during the performance period against the key result areas and standards of performance discussed and agreed between the employee and his line man- ager and the data necessary to support the views of the employee is to be given. This self-assessment has three sections:
a) Key result areas assessment : in this section the appraisee has to detail out his achieve- ments on each key area listed in the job plan.
b) Any other achievement: here the details beyond the KRA’s are given ie. The accom- plishments, which are not listed in KRA’s.
c) Any difficulties in achieving KRA’s: any resource constraint, contingency or situation that were hindrance to achieve targets. And also the measures, which are important to prevent similar situation, arising again.
After completing the self-assessment the appraisee submits the assessment online, which will send intima- tion to the appraiser.
Appraiser also checks that basic information, cur- rent job plan and self-assessment, makes changes if any and save it. The revised/changed form will now be visible to the line manager.
After this appraisal start and the appraiser reviews the performance of the appraisee.
Appraiser gives ratings on KRAs on the scale of five wherein 5 is the highest.
• Performance clearly and consistently exceeds job requirements.
• Performance frequently exceeds job require- ments
• Performance consistently meets all job require- ments.
• Performance frequently meets some but not all job requirements.
• Performance consistently fails to meet job requirements.
These scores come in due weight age decided during the plan agreed upon.
The appraiser on performance of the employee gives comments and discussions are done on each aspect with the appraisee at this stage. When appraiser fills the ratings then the overall rating comes in auto- matically.
9) Training & Development
Appraiser discuss with the employee his profes- sional strengths and areas where improvement is required.
Development plans has four aspects:
• line manager’s support
Appraisee can make multiple training choices and can prioritize them.
10) New job plan
The new job plan is then discussed and decided upon. It should be specific, measurable, and achievable, resource defined with timeline and weight age is given against each KRA, which should add to 100.
Once this appraisal completes and the employee is appraised then it is forwarded to reviewer to give the appraisal review and remarks. In this section employee, line manager and reviewer can give remarks and a discussion can also be done if the reviewer finds that rating needs to be changed.
A history of remarks is maintained in remarks history column.
After completing the review, the reviewer submits it and a mail goes to appraisee to insert his remarks and to accept the appraisal exercise to complete the process.
• The appraisee can also request for re- consideration, the line manager will be intimated to resolve the issue and to facilitate completion of appraisal.
• The process of appraisal ends with appraisee accepting the appraisal
Thus this completes the performance cycle. Thecycle again starts with subordinate and boss discussing and revising or making the new job plan for the next cycle.
5. PERFORMANCE MANAGEMENT SYSTEM IN BHUSHAN STEEL LTD.
1. In BSL, the operative performance management system consists of:
2. A process for communicating employee performance expectations, maintaining ongoing performance dialogue, and conducting annual performance appraisals;
3. A procedure for addressing employee performance that falls below expectations;
4. A procedure for encouraging and facilitating employee development;
5. Training in managing performance and administering the system; and
6. A procedure for resolving performance pay disputes.
THE PROCESS OF MANAGING PERFORMANCE
Supervisors and managers are responsible for managing the performance of their employees. Each company’s policy shall specify how the four phases of performance management will be carried out. Companies shall adopt performance management practices that are consistent with the requirements of this policy and that best fit the nature of the work performed and the mission of the organization.
Figure (ii): Performance management cycle at Bhushan Steel Ltd.
The performance management process in BSL is the combination of all these individual processes at different levels.
Stage 1: Communicating employee performance expectations
At the beginning, supervisors meet with their employees, establish expectations regarding their employees’ performance, specify how employees’ actual performance will be measured and their success determined, and impart to them an understanding of how meeting these expectations will contribute to the achievement of the company’s mission
Stage 2: Maintaining ongoing performance dialogue
Employees are responsible for meeting their performance expectations and their progress towards meeting expectations is measured, reported, discussed, and documented throughout the work cycle.
To meet or exceed their efforts to support the performance expectations, supervisors use appropriate technique. When there is a change in expectations during the course of the work cycle, supervisors also communicate these changes and modify work plans as necessary.
Stage 3: Conducting Annual Performance Appraisal
Now at the end of the work cycle, supervisors evaluate employees’ performance during the past year compared to their performance expectations. They use verifiable information collected and documented throughout the cycle to determine the extent to which actual performance has met the expectations defined in the work plan.
The evaluation is documented by the H.O.D. on a standard form defined by the company. The company has different appraisal forms for different work forces like workers, staff and senior staff.
BSL uses a 5-level rating scale for reporting overall performance. Prior to discussing the completed performance appraisal with an employee, supervisor review the appraisal with the next level manager to ensure that ratings are appropriate and consistent. Then supervisor signs and date the completed appraisal indicating that the employee is reviewed on his/ her performance for the last year.
Stage 4: Providing actionable coaching and Feedback
By using the appraisal form the company becomes aware of the performance of all the employees and their remarks which were given by their HODs.
I Addressing Poor Performance
In case of the poor performance, the supervisor documents the performance that falls short of expec- tations by preparing a corrective action plan or other documentation. The documentation specifies:
1. The performance problem,
2. The steps to be taken to improve performance, including the timeframe of the improvement,
3. The consequences of failure to improve, and 4. A follow-up date.
PMS MODEL FOLLOWED BY BSL
Figure (iii): PMS model at BSL
Now these performance deficiencies that occur dur- ing the performance cycle are referred in the annual performance appraisal.
In BSL, to overcome the poor performance, the company provides training. So that the employee can become able to sort out that problem
REVIEW OF THE BSL’S ANNUAL PERFORMANCE APPRAISAL FORM FOR STAFF
This form is for the measurement of the perfor- mance of the staff employees. In BSL the appraisal is done on the basis of the date of joining.
Performance dimensions on which the performance of the staff is measured are:
4. Leadership and Followership
5. Attitudinal relation with seniors, juniors and colleagues
6. Communication and Presentation 7. TeamSpirit 8. Ability to train persons 9. Ability to plan/ Execute new ideas 10. Punctuality and Discipline
12. Willingness to learn, accept, challenge, ac- knowledge mistake and to correct them
13. Environment and Safety consciousness
14. Special Achievements
15. Other quality
These are some of the dimensions on which the performance is measured:-
Rating on the Scale of 5- These dimensions are then rated on the scale of 10, 8, 6, 4 and 2. After that all the scores get totaled.
Comments and Training need Identified- The super- visor then gives his comments and writes down if there is any need of training is identified during the last year.
Final rating- There is a final rating that is given on the basis of the grand total of the all ratings given on the individual performance dimension. The final rating lies on the scale of A to E.
Signature- After that HOD signs and dated the form.
In Bhushan Steel Ltd., the appraisal data is used for identifying the training needs. Basically they fol- low a system of “Appraisal Based Training”. Here the company on one end identifies the areas of improve- ment and on the other hand develops the employees by giving them coaching towards their weaknesses.
In today scenario where the organizations are mov- ing toward performance-based culture, PMS plays a very vital role. The PMS includes criteria (performance expectations) that are measured against outcomes (intended products, results, accomplishments, or ob- jectives) in terms of whatever metrics are appropriate.
• ICICI prudential performance management system aims at focusing individual efforts to organizational objectives. At a broad level it drives the desired performance while at an individual level it provides well-defined key performance indicators (KPIs). As a process it also provides a framework for assessment of KPIs and creates a visible, transparent and fair reward system. Finally and most impor- tantly it enables a feedback mechanism, which aligns individual behavior with the goals for the organization.
• Bhushan Steel Limited being an old and established company has well laid manage- ment system. To maintain there management throughout they have given prime importance to the human resource. As a result the Perfor- mance management system of Bhushan steel is very crucial to maintain. The measurement of the performance is done on the annual basis but the performance of the employee is recorded by his/her supervisor on each movement. On this analysis the training needs of the company are identified .The employees in BSL are all well aware of the PMS system of the company and they find that PMS is necessary for every organization. Appraisal exercise is the neces- sary tool to measure the employee’s worth of the performance.
1. Brumbach, G B (1988) Some ideas, issues and predictions about performance management, Public Personnel Management, Winter, pp 387–402
2. Egan, G (1995) A clear path to peak performance, People Management, 18 May, pp 34–37
3. Kaplan, R S and Norton, D P (1992) The balanced scorecard – measures that drive performance, Harvard Business Review, January–February, pp 71–79
4. London, M and Beatty, R W (1993) 360-degree feedback as competitive advantage, Human Resource Management, Summer/Fall, pp 353–72
5. Mohrman, AM and Mohrman, S A(1995) Performance management is ‘running the business’, Compensation and Benefits Review, July–August, pp 69–75
6. Risher, H (2003) Refocusing performance management for high performance, Compensation and Benefits Review, October, pp 20–30
7. Schaffer, R H (1991) Demand better results and get them, Harvard Business Review, March– April, pp 142–49
8. Skule, S. (2004) ‘Learning Conditions at Work: A Framework to Understand and Assess Informal Learning in the Workplace’, International Journal of Training and Development, 8:1, pp. 1-13.
9. Turnow, W W (1993) Introduction to special issues on 360-degree feedback, Human Resource Management, Summer/Fall, pp 311–16
10. Winstanley, D and Stuart-Smith, K (1996) Policing performance: the ethics of performance management, Personnel Review, 25 (6), pp 66–84
11. Wood, S. (1999) ‘Human Resource Management and Performance’, International Journal of Management Review, 1:4, pp. 367-413.
MS. NEERAJ KUMARI (Research Scholar, MRIU) (Corresponding Author)* Assistant Professor (Humanities & Management) FET, Manav Rachna International University Faridabad, India. Email: firstname.lastname@example.org Complete mailing address: 2769 GF, sector 16, Faridabad, Haryana- 121002,INDIA
DR. RUCHI MALHOTRA** HOD Management Faculty of International Programmes, Manav Rachna International University ESSCA Ecole de Management LUNAM Université FRANCE